Correlation Between Bed Bath and Erie Indemnity

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bed Bath and Erie Indemnity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bed Bath and Erie Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bed Bath Beyond and Erie Indemnity, you can compare the effects of market volatilities on Bed Bath and Erie Indemnity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bed Bath with a short position of Erie Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bed Bath and Erie Indemnity.

Diversification Opportunities for Bed Bath and Erie Indemnity

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bed Bath and Erie Indemnity is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bed Bath Beyond and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and Bed Bath is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bed Bath Beyond are associated (or correlated) with Erie Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erie Indemnity has no effect on the direction of Bed Bath i.e., Bed Bath and Erie Indemnity go up and down completely randomly.

Pair Corralation between Bed Bath and Erie Indemnity

Given the investment horizon of 90 days Bed Bath Beyond is expected to under-perform the Erie Indemnity. In addition to that, Bed Bath is 5.55 times more volatile than Erie Indemnity. It trades about -0.22 of its total potential returns per unit of risk. Erie Indemnity is currently generating about 0.09 per unit of volatility. If you would invest  21,782  in Erie Indemnity on July 3, 2022 and sell it today you would earn a total of  449.00  from holding Erie Indemnity or generate 2.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bed Bath Beyond  vs.  Erie Indemnity

 Performance (%) 
       Timeline  
Bed Bath Beyond 
Bed Bath Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bed Bath Beyond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bed Bath showed solid returns over the last few months and may actually be approaching a breakup point.

Bed Bath Price Channel

Erie Indemnity 
Erie Indemnity Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Erie Indemnity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward indicators, Erie Indemnity exhibited solid returns over the last few months and may actually be approaching a breakup point.

Erie Indemnity Price Channel

Bed Bath and Erie Indemnity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bed Bath and Erie Indemnity

The main advantage of trading using opposite Bed Bath and Erie Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bed Bath position performs unexpectedly, Erie Indemnity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erie Indemnity will offset losses from the drop in Erie Indemnity's long position.
Bed Bath vs. Best Buy Company
The idea behind Bed Bath Beyond and Erie Indemnity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Erie Indemnity vs. Amazon Inc
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

Other Complementary Tools

Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go